Democrats seek boost in state's minimum wage

They cite study showing states with higher wage laws have more growth.

They cite study showing states with higher wage laws have more growth.

September 08, 2006|MARTIN DeAGOSTINO Tribune Staff Writer

INDIANAPOLIS -- Senate Democrats want lawmakers to raise the minimum wage to $7.25 an hour over the next two years and offer new tax credits for on-site child care centers at businesses. The Democrats said consumer prices -- including gasoline, utilities, food and health care -- have risen steadily since the state and federal minimum wage rose to $5.15 in 1997. "The one thing that has not gone up is the hourly minimum wage in the state of Indiana," Sen. Tim Lanane, D-Anderson, said. The Democrats said 22 states, including Michigan and Illinois, have already boosted their minimum wage above the federal level, and the time is ripe for Indiana to act. "It's been 10 years, and 10 years is a long time to be stuck at a certain point," Sen. Frank Mrvan, D-Hammond, said. The Indiana Chamber of Commerce did not return two phone calls seeking comment. Business interests generally oppose mandatory wage hikes, on grounds that they hurt business and employment. According to the Democrats, numerous studies show that higher minimum wages do not depress employment or business revenues but actually boost economic activity by workers. One such study, reported this year by the New York-based Fiscal Policy Institute, said that "employment and payrolls in small businesses grew faster in the states with minimum wages above the federal level than in the remaining states where the ... federal minimum wage prevailed." The same report also described a "Henry Ford" effect on overall economic activity, in which higher workers' wages encouraged more buying. "So hopefully that will also happen here," Sen. Karen Tallian, D-Portage, said. Democrats filed similar legislation this year, but it died without a hearing in the Republican-controlled Senate. Citing figures from the U.S. Bureau of Labor Statistics, the Democrats said 37,000 Hoosiers earn the federal minimum wage or less (some workers, including waiters and waitresses, are not covered by the standard). But they said their proposal would cover 143,000 Hoosiers who already earn up to the proposed hourly wage of $7.25. Regarding child-care tax credits, Democrats said they want to encourage businesses to provide on-site facilities that would benefit families while reducing care-related absenteeism. They proposed tax credits of $20,000 or 40 percent of the facility costs, whichever is less. "We think this is a win-win situation" for businesses, workers and children, Lanane said. Staff writer Martin DeAgostino: mdeagostino@sbtinfo.com (317) 634-1707